'Prudent management of finance by govt needed'

Kuala Lumpur: The Federation of Chinese Associations Malaysia (Huazong) President, Tan Sri TC Goh (pic) said the government must take serious cognisance of the potential far-reaching ripple effects of global crude oil prices crash on the economy.

“The government must take necessary measures, including more prudent management of its finance, to mitigate its impact on the annual Budget, as well as the Prihatin Rakyat economic stimulus packages,” he said. He was especially concerned that the global crude oil prices crash may severely impact Petronas earnings, and may in return thwart its plan to pay RM24 billion dividend to the government this year. Besides this, it may also pose a slim chance for the government to receive any ‘special dividend’ from Petronas.

Last year, Petronas paid a total of RM54 billion dividends to the government, comprising RM24 billion in normal dividend and RM30 billion in special dividend.

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The additional RM30 billion was to help the government settle refunds of RM37 billion in Goods and Services Tax and income tax.

“Our financial position this year is going to be more devastating than last year. This is obvious, as since the Covid-19 pandemic started, businesses across the board had come to a grinding halt, and the government had since rolled out three economic stimulus packages to assist the various sectors to cope with the economic crisis.

“This has inevitably added to the government’s financial burden, while numerous reports had indicated a negative growth for this year. Hence, this made it even more pressing for the government to continue to receive the ‘special dividend’ from Petronas,” he said in a statement, Wednesday. He went on to note that, to mitigate the devastating economic impact of the Covid-19 pandemic, the government had thus far provided three economic stimulus packages totalling at RM260 billion, an equivalent of 18 per cent of the national Gross Domestic Product (GDP). The direct injection of funds too has been increased from RM25 billion to RM35 billion. Meanwhile, there are signs indicating that the government might have to inject more funds into the economic stimulus packages, in order to sustain and promote economic growth. He recalled that the government had earlier indicated that it plans to pump in additional funds through a certain (yet-to-be-identified) government-linked companies to fight Covid-19 crisis and to stimulate the economy, and Petronas is likely to be one of candidates based on previous trends.

Goh added that, Petronas President and Group Chief Executive officer, Tan Sri Wan Zulkiflee Wan Ariffin, had during his briefing on its financial year 2019 performance, in February, said it will pay RM24 billion dividend to the government this year.

He nonetheless disclosed that there was no plan for a special dividend payment to the government this year. This was further confirmed by Petronas in a separate statement subsequently, citing the company’s tight financial position to service its loans and to stay afloat amidst the Covid-19 crisis.

It was recently reported that the government may ask Petronas to again pay special dividend.

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Goh also noted that, despite the government’s efforts to diversify its tax revenues, especially to reduce its dependence on crude oil revenues, crude oil export continues to remain as the nation’s key revenue earner in recent years, consisting of around 20 per cent or more of the national GDP.

He further noted that, in support of the Organisation of the Petroleum Exporting Countries (Opec) deal to cut oil production to stabilise crude oil prices, being a member of OPEC, Malaysia too has agreed to slash its oil production by 136,000 barrels per day, starting from next month.

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